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Failure to Pay Employees Properly May Lead to Time in the Slammer for New York Employers

Employers who fail to properly pay employees in the State of New York may soon find themselves in jail.  Governor Cuomo recently announced his proposed budget for fiscal 2020, which includes legislation to crack down on “wage theft” and increase criminal penalties and fines for employers who fail to pay employees correctly. 

Where We’ve Been

The Wage Theft Prevention Act went into effect in in New York State in 2011 and expanded the civil and criminal penalties employers faced for failure to pay employees correctly.  The title of the law, however, is somewhat a misnomer.  “Wage theft” is not an employer literally stealing from an employee’s pocket.  Instead, wage theft occurs when an employee is not paid for all hours worked, not paid for overtime, or when inappropriate deductions are taken from an employee’s pay, among other things.  Simply, “wage theft” occurs when an employer fails to pay an employee properly. 

There have long been criminal and civil penalties for failure to pay employees correctly in New York and in many other states. Historically, however, employers did not go to jail.  The Governor’s new proposed bill, however, is an example of the State upping the ante for improper payroll practices.  Under the new bill, employers are potentially subject to criminal penalties ranging from a Class B misdemeanor for wage theft of less than $1,000 to a Class B felony for wage theft greater than $50,000. 

Where We are Going

Under the proposal, the New York State Department of Labor will have the ability to make referrals to the District Attorney and Attorney General. Historically, these cases were not prosecuted by the State and thus jail time was not an issue.  However, in light of the increased penalties, the cases are more attractive for New York State District Attorneys who have limited time and normally use their prosecutorial discretion to choose cases that make a bigger rather than littler bang! 

Employers should contact competent labor and employment counsel now to conduct a wage and hour audit of their payroll practices.  Even well-meaning employers oftentimes find they have more issues than they thought after an audit is performed. For instance, many employers pay their administrative professional a salary despite the fact the professional does not meet the FLSA duties test to be exempt.  If such an administrative professional worked in excess of forty hours a week, then the employer has failed to pay appropriate overtime since the employee received a static salary.  This is a classic example of an unintentional wage theft violation. 

Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.